DGRE, which has an annual expense ratio of 0.63%, is not excessively weighted to the BRIC nations. Not a bad thing this year as Brazilian and Indian stocks, among others, have been among the worst emerging markets performers.
Rather than focusing on yield or dividend increase streaks, DGRE’s underlying index, the WisdomTree Emerging Markets Dividend Growth Index (WTEMDG) ranks companies based on long-term earnings expectations and return on equity and assets, two of the truest signs of a company’s ability to continue raising its payout. From there, DGRE’s constituents are weighted based on annual cash dividends paid. [WisdomTree Adds Another Dividend ETF]
While DGRE is short on BRIC countries, it does feature decent exposure to some developing markets that can be labeled as “potential rebound plays.” “WTEMDG gives more weight to Mexico, Indonesia and Thailand (“MIT”) than it does to Brazil, Russia, India and China (BRIC). By contrast, the MSCI Emerging Markets Index gives almost four times more weight to BRIC countries than to MIT,” said WisdomTree Research Director Jeremy Schwartz.
That does not mean DGRE is excessively allocated to high beta sectors. In fact, the opposite is true as telecom leads DGRE’s sector weights at 15.3%. Staples check in at 17%. Financial services and energy, often the dominant sectors in an array of emerging markets ETFs, combine for less than 18%.
Brazil is DGRE’s largest country weight at 15.5% and while the Brazilian dividend scene has been somewhat mediocre this year, DGRE is not heavy on Brazilian utilities, perhaps the most troublesome group of Brazilian dividend payers. The new ETF also features an almost 12% weight to Russia, the fastest growing dividend market in WisdomTree Emerging Markets Equity Income Index, DEM’s underlying index
WTEMDG’s current yield is 3.43% with a P/E ratio of 14.7, according to WisdomTree data.
Bottom line: DGRE’s rookie status belies its potential to offer investors a flexible dividend option and access to future payout growth in the emerging world.
DGRE Country Weights
Tom Lydon’s clients own shares of DEM.